Coronation Merchant Bank on investing in the new normal amid COVID-19

Coronation Merchant Bank, a key player in the Nigerian financial landscape, has recently raised concerns about the changing investment landscape in Nigeria. In a recent interview with CNBC Africa, Guy Czartoryski, the bank's Head of Research, discussed how investors need to adapt to the 'new normal' in the wake of the COVID-19 pandemic. For years, Nigerian investors have relied on Treasury Bills (T-Bills) to provide inflation-beating returns. However, Czartoryski points out that this may no longer be the case due to shifting market dynamics and economic conditions. The interview delved into the challenges facing investors and the potential opportunities in the Nigerian investment space. Let's take a closer look at the key points raised during the discussion. The 'new normal' refers to a period of uncertainty and volatility in the investment landscape. Traditional safe-haven investments like T-Bills may no longer offer sufficient returns to beat inflation, which is currently at 12.56%. This poses a dilemma for fund managers and pension funds, who must now consider alternative investment options. Czartoryski emphasized the need to beat currency depreciation and generate returns in dollars to protect investors' purchasing power. With T-Bills falling short of inflation, investors are exploring riskier assets like longer-dated bonds and equities. However, these investments come with their own set of challenges and require a thorough risk assessment. The equity market in Nigeria poses a unique set of challenges for investors. While some sectors, like telecommunications, show potential for growth, many companies struggle to deliver the required return on equity (ROE). Czartoryski highlighted the importance of confidence in the market and the need for companies to demonstrate their ability to generate sustainable returns. In the second half of the year, earnings for major listed companies are expected to be under pressure due to the ongoing economic downturn. Despite this, Czartoryski suggested that it could be an opportune time for investors to consider adding quality stocks to their portfolios at discounted prices. Overall, the interview shed light on the complexities of the Nigerian investment landscape and the need for investors to adapt to a more challenging environment. By diversifying their portfolios, exploring new investment opportunities, and conducting thorough due diligence, investors can navigate the 'new normal' and position themselves for long-term success in the ever-evolving market.